Morning Commentary: Chemours bonds rally on settlement news; gategroup sells CHF 300 million at 3%

By Paul A. Harris

Portland, Ore., Feb. 13 – Bonds of Chemours Co. and DuPont rallied on Monday morning on news that the companies have reached a final settlement of the multi-district litigation involving claims of toxic effects of perfluorooctanoic acid, also known as PFOA or C-8, that leaked from a West Virginia plant.

The Chemours 6 5/8% senior notes due May 15, 2023 were up 4 points 105¾ bid, 106½ offered on Monday morning, according to a trader.

That paper was 101¼ bid, 101½ offered on Friday, the source said, adding that the terms of the settlement – both companies have agreed to pay $335.35 million apiece to settle 3,500 claims in the Ohio multi-district litigation – were less egregious than expected.

Elsewhere Monday, recent deals in the resources sector are hanging above new issue prices, the trader said.

The Cliffs Natural Resources Inc. 5¾% senior notes due March 1, 2025 (B3/B) were trading in the context of par 3/8 bid to par ½ bid, after having traded as well as 101 bid on Friday.

The $500 million deal priced at par on Friday, coming 75 basis points tighter than initial guidance, the trader said.

A big technical bid in the junk bond market, which has the accounts scrambling to remain invested, has caused dealers and issuers to force their hands, bringing deals so rich that the bonds have nowhere to run, the trader said.

Another case is that of the Halcon Resources Corp. 6¾% senior notes due Feb. 15, 2025 (Caa1/B-), trading around par bid, par ½ offered on Monday, the source said.

That $850 million deal priced at par on Thursday.

Jerrold, gategroup active

Although the dollar-denominated primary market was quiet on Monday morning, there was activity in European new issues.

Switzerland-based gategroup priced a CHF 300 million issue of five-year bonds at par to yield 3%.

The yield printed on top of revised yield talk in the 3% area. Initial talk was 3% to 3¼%.

BNP Paribas, Credit Suisse and UBS managed the sale.

Elsewhere Jerrold Holdings Ltd. plans to start a roadshow on Tuesday for a £200 million offering of seven-year notes via Credit Suisse.

Jerrold, a financial institution based in Cheadle, England, plans to use the proceeds for general corporate purposes.

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